This supervisory exercise will begin with, but not be limited to, taking stock of banks’ self-assessments – and it will have important consequences for banks. We then asked banks to conduct a self-assessment relating to the expectations we set out in that guide, and to draw up action plans for how they intend to comply with them. In that guide, we make it clear that we expect banks to take a comprehensive, strategic and forward-looking approach to disclosing and managing all climate-related and environmental risks – which also include, for example, the risks of biodiversity loss and pollution. In November of last year, ECB Banking Supervision published a guide on climate-related and environmental risks. The latest edition of our Financial Stability Review suggests that around 80% of European banks are already exposed to climate-related physical risks. The ECB has identified climate change as a key risk factor for the European banking sector in 2021. And in any case, banks do already have access to enough information to start making real progress. As patchy as those data may be for now, it will enable progress in climate issues too. We have got better at collecting information on the consequences of climate change. But as imperfect a measure as it was, it enabled progress and was a fundamental step towards lifting economies out of the Great Depression.įast forward 90 years – and you will find us here, today, facing an even greater challenge than the Great Depression: climate change. And yes, the data were patchy and incomplete at first. No, national accounts were not harmonised. It was a faulty measure – and remains so to this day – but it was the best possible solution at the time. So let’s go back almost a century to the 1930s, a time when governments were struggling to pull their economies out of the abyss of the Great Depression.Īfter experimenting with new tools, it was the development of national accounts by economists like Clark in the United Kingdom and Kuznets in the United States that gave policymakers a first real grip on of how the economy was doing. When thinking of lessons learned, one looks to the past. And it is important that we share the knowledge we gain and the lessons we learn along this journey. Our efforts to raise the bar for climate risk management and disclosures are motivating some banks to explore climate and environmental risks further and manage them better. But progress is possible, as a few banks have already shown. Supervising and managing climate risks represents a long journey into a new and complex topic for all of us. We should be expanding our capacity and expertise in dealing with climate topics, and we should be shining a light on good practices around the globe. It is a reminder that the soundness of the global financial system also hinges on us holding the banks accountable for the way they manage climate risk. And all banks need to catch up, as their climate risk undertakings will eventually influence their supervisory requirements.īut I would also say that the inertia a number of banks have shown so far on climate issues also serves as a clear warning to us, the supervisory authorities. They are all still a long way off meeting the supervisory expectations we have laid out for them. All banks have several blind spots and may already be exposed to material climate risks. None of the banks under our supervision meet all our expectations. However, our overall initial snapshot is rather disappointing. In short, almost all banks have developed implementation plans, and many have started to progressively improve their practices. Today I will share with you some of the ECB’s preliminary insights from looking at banks’ self-assessments of their climate risk undertakings. Keynote speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the ECB-EBRD joint conference on “Emerging climate-related risk supervision and implications for financial institutions”
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |